As is usually the case, the onset of summer dramatically increases the interest of international buyers in purchasing a second home in Spain. Huge demand for tourism, travel, moving to another country, and buying overseas housing has been accumulating from the international buyer since the beginning of the pandemic, when international restrictions on movement came into full force.
As soon as the acute period of COVID-19 ended, and restrictions began to be relaxed. This accumulated demand spilled over to all global real estate markets. And Spain, of course, has become one of the main destinations. Therefore, the growth of the number of would-be buyers seeking to acquire a second home in the country has been steadily strengthening since the end of 2021.
The Spanish Mortgage Association (AHE) publishes a report every 6 months on the state of the country's mortgage market and the portfolio of loans issued. The most recent such report, published in December 2021, indicated that 86.7% of mortgages were for the purchase of a first residential property. Only 9.8% of loans were issued for the purchase of a second real estate unit. On the other hand, when compared with 0.7% at the end of 2020, we have an extremely impressive increase in the share of such funding.
Similar data can be seen in the market research conducted by the real estate portal Fotocasa. The company analyzed the profile of a 2nd property buyer in Spain and indicated that 11% of the total demand for the purchase of residential property in the country came from people who were looking for a second home. This is a 2% increase compared to 2020. At the same time, the major role is played by foreign buyers, who account for 89% of the total demand in this category.
According to other data compiled by comparator and mortgage advisor iAhorro, 75.1% of people who took out a mortgage in the 1st half of 2022 were looking for a loan to buy their first home. This group of borrowers has never owned their own real estate before. The remaining 24.9% entered into a contract to buy a 2nd residential property.
Stricter conditions on mortgages for second homes
Regardless of whether the borrower is a foreigner or not, the conditions for granting a loan for the first and second housing units differ dramatically in several ítems. Perhaps one of the key ítems is the amount of the total cost of a property, which the loan allows you to cover.
Requirements for loans for the first home state softer conditions and allow you to finance up to 80% of the final cost of the acquired property. At the same time, if you’re going to purchase a second residential unit, loans usually cover only 60% of its value. At the same time, when purchasing a first property, the borrower can turn to the help of guarantors or a good credit history to further increase the share of financing, exceeding the threshold of 80%.
In case of purchasing a second property by a foreigner who takes a loan the bank may increase the interest rate, ask for a shorter repayment period, or provide financing well below the usual maximum of 60%.